BETTER off elderly people in Scotland are "propping up" the ailing care home sector by paying thousands of pounds a year more in fees than council-funded residents, a major report has revealed.

Massive underfunding by the state has been blamed for the gulf which has left residents in Scotland who fund their own care being charged an estimated 39 per cent more - around £12,000 annually - than residents in the same home who are paid for by the local authority via Integrated Joint Boards (IJBs).

Anyone in Scotland with savings or assets in excess of £26,500 is required to pay for their own care.

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The findings emerged in a major investigation by industry watchdog the Competition and Markets Authority (CMA) which warned that the sector is struggling to plug a UK-wide shortfall of some £1 billion a year because cash-strapped councils are not meeting the full cost of care, with self-funding residents saddled with higher expenses as a result. The fee gap in Scotland between private and council-funded residents is roughly the same as the UK average of 40 per cent.

The CMA states: "We do not consider this to be sustainable; we have seen very few examples of investment in new care home capacity primarily focused at the state-funded sector. The upshot will be that in the future local authorities and IJBs will not be able to provide services to all those with eligible needs.

"Moreover the number of elderly people who are likely to need support, and the acuity of their care needs, is likely to increase."

It added that the shortfall in public expenditure on adult social care meant that there was "no incentive on homes to incur the costs of modernising facilities or building new capacity, and in time some will be forced to close".

It comes months after Scottish Care, the umbrella body for the care home industry, warned the sector was on the "brink of collapse" amid rising fuel and food costs and a shortage of nurses which were pushing up overheads by 8.5 per cent against while councils were offering them a funding rise of less than one per cent.

The CMA said tougher consumer protection was also required after its probe uncovered evidence that some care home providers are unfairly charging upfront fees, and continuing to charge fees for "extended periods" after a resident has died. It is now pursuing enforcing action "a number of providers" across the UK in relation to such infringements, but declined to say whether this included any Scotland-based care homes.

The watchdog stressed that frail elderly people and their families were "vulnerable to unfair contracts and business practices" because they were often choosing a care home "under extremely stressful circumstances, in a very short period". Once established in a home, it added "very few residents are willing and able to move" and therefore "unable to rectify a poor choice of home".

It has called on care homes to disclose accurate information about fees, terms and conditions "in a timely way" and urged the Scottish Government to "introduce stronger sector rules so that compliance with consumer law is embedded into the regulatory regime for care homes".

However, the CMA said Scotland - unlike other parts of the UK - was currently drawing up a cost of care model to guide the rates paid by local authorities to reduce the risk that the fees paid to providers were too low, and that IJBs were developing models "to meet future needs in the next ten to 20 years". It added: "We need to give these initiatives a chance to deliver change."

Dr Donald Macaskill, CEO of Scottish Care, said the report underlined "the impact of stripping tens of millions of pounds out of social care by Westminster and by Scottish Government".

He added: “Current rates of as low as £3.42 an hour to support an elderly person with multiple and complex needs for 24 hours, seven days a week in a care home in Scotland in no way meets the true cost of providing high quality, sustainable care.”

Health Secretary Shona Robison said: “Over the last three years funding through the National Care Home Contract has increased by 13.2 per cent - from £609.31 to £667.09 per place, per week. This allows independent care providers to invest in their staff, the quality of their service, and to take a reasonable return out of the business.

“In the current financial year almost half a billion pounds of frontline NHS spending in Scotland will be invested in social care services and integration – showing that we are taking action to protect our care services.”

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